BHP, Anglo’s Cerrejon to Miss Coal Output Goal After Storms

BHP Billiton Plc (BHP), Anglo American Plc (AAL) and Xstrata Plc (XTA)’s Cerrejon coal mine will miss its output target this year after rainstorms curbed production in Colombia.

Cerrejon will produce less than its target of 32.5 million metric tons after rains prompted mine stoppages to ensure the safety of workers, said the venture’s Chief Executive Officer Leon Teicher. Output at Cerrejon, the world’s largest open pit coal mine for export, will be above 32 million tons, he said.

“Whenever there is rain we stop the mine,” Teicher, who’s slated to step down this month, said in a telephone interview. “It’s had a major impact on our production in October, November and December, but we have been able to compensate.”

Rainfall that also is hampering operations at mines owned by Glencore International AG’s Prodeco group, Drummond Co. and Itochu Corp. will limit the nation’s coal output through early next month, National Federation of Coal Producers President Jaime Olivella said today in a phone interview. Colombia is South America’s largest supplier of coal.

Colombia will produce 75 million to 80 million metric tons this year, according to Olivella, below a government forecast for 85 million tons. Rain is flooding mining pits, making roads slippery, forcing trucks and excavating equipment to operate more slowly and slowing coal transport between mines and ports, according to Olivella.

December Rainfall

At Cerrejon, the number of days of rainfall in December already has exceeded the amount management expected for the whole month, Teicher said. Rains increase the risk of driving large trucks loaded with tons of coal.

Last year, Cerrejon exported about 31.3 million tons of coal while production was 31.5 million tons, according to Teicher. Next year, exports from Cerrejon to Latin America will likely surpass North America led by growing demand from utilities in Chile and Brazil, he said.

“We’re about at the inflection point,” Teicher said.

Colombia mainly produces thermal coal and also has mines exporting metallurgical coal used for steel production. In the mountainous provinces of central Colombia, flooding is slashing production of metallurgical coal, according to Olivella.

To contact the reporter on this story: Heather Walsh at hlwalsh@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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